THE WIDELY ADVERTISED revolt of the taxpayers leaves President Carter in a peculiar position. He has been, from time to time, the spokesman of both sides of the argument. Mr. Carter was one of the first Democrats of any rank to sense that voters' resistance to the growth of governments and their budgets was spreading. That had a good deal to do with his winning the presidential nomination over the more convential Democrats in the competition. In office, Mr. Carter has spoken repeatedly about limiting government and its spending. But at the same time he has promised the country a series of large expensive ventures that are very much in the Democrat's tradition - legislation for welfare reform, for aid to the cities, for better health care. Two very different ideas of the Democratic Party are at war here. The California vote on taxes last week did not initiate that difference, but only sharpened it.
California's troubles are, you might say, the opposite of New York City's. In New York, it was spending that flew out of control and the city's bankers and lenders who eventually revolted. California was the less common example in which it was revenues that got out of hand. The state had rolled up a surplus of more than $4 billion while Gov. Jerry Brown's administration sat complacently by. Meanwhile, an automatic provision in the assessment laws was shooting local properly levies mindlessly upward at a geometric rate.
Like local property taxes, federal income taxes keep being raised by inflation - and raised faster than incomes. Long usage has accustomed American taxpayers to a level of federal spending that is roughly one-fifth of the total output of the economy - the gross national product. For a good many years, up to the late 1960s, spending remained a little less than 20 percent of gross national product. Under the pressure of the Vietnam War, it then went up over 21 percent but sank again until 1974, the year when the country was simultaneously hit by severe recession and inflation. Last year it was 22 percent. Each percentage point, remember, means $20 billion of federal spending. This year it is up to 22.6 percent.
The most prominent advocate of pulling that ratio back down is, of course, Mr. Carter. He has repeatedly set the goal of getting down to 21 percent by the early 1980s. The significance of that number is that present federal programs and commitments will leave very little room for new initiatives. It would be very difficult to add much in the way of increased defense spending or urban aid or welfare reform. Unless there are to be substantial cuts in present programs, national health insurance becomes impossible.
The argument is over not only the size of the tax burden, but its distribution. It might seem curious, with so much talk of public resistance to taxes, that Congress should have shown so little enthusiasm for the president's tax-cut bill.The explanation is that the bill gives most of that cut to people in the lower half of the income scale. Congress does not, at present, care to go any further in that direction.There is a sudden proliferation of bills that would give more of the cut, by one device or another, to the upper half.
A revolt is running among the voters, but it is not, we think, against taxes in themselves, or against a decent level of public services. It is against the unthinking, automatic effects of continuous inflation on the tax structure. It is a revolt against paying steadily higher shares of income, not to meet any demonstrated and urgent public need, but merely because the blind mathematics of inflation and the tax tables work out that way. Mr. Carter now has to choose among cherished goals that are headed toward a collision - the goal of holding down the budget, and the goal of broader health and welfare legislation. He is evidently preparing to give priority to his pledge on taxes and spending. In the present circumstances, that decision is clearly the wiser one.